TARIFFS ON SOYBEANS WILL SWITCH MORE ACRES TO CORNOct. 29, 2018Dow Jones reports:

American farmers hit by the U.S.-China trade battle are preparing to reshape the U.S. Farm Belt by planting more corn and less soybeans next year over a land mass potentially equal to the size of Connecticut.

For decades, corn was U.S. farmers' crop of choice, its tall stalks carpeting the Midwestern landscape. Soybeans, shorter and bushier, began decades ago as a niche crop raised on less acreage but came to rival corn in recent years because of growing demand from China.

U.S. farmers in 2018 planted more soybeans than corn for the first time in more than three decades, betting on that demand. But Chinese tariffs on U.S. soybeans have wreaked havoc: U.S. exporters have sold less soybeans to China, typically the largest foreign buyer of the crop, in the past seven weeks than in a single week last fall. Soybeans inspected for export from ports in the Pacific Northwest -- a main U.S. originator of soybeans bound for China -- recently stood 82% below their year-ago level. Prices for the oilseeds have dropped 11% this year.

"Prices will tell you that you would see a significant shift out of soybeans toward corn in the U.S.," said Soren Schroder, chief executive of grain-trading giant Bunge Ltd., speaking at a Wall Street Journal conference in September. Some analysts say farmers could convert as much as four million acres from soybeans to corn next spring.

Many farmers and agricultural officials said final crop choices might not be made until just weeks or days before planting gets under way, partly because of uncertainty over tariffs. President Trump and his Chinese counterpart Xi Jinping are scheduled to meet at the Group of 20 leaders' summit in Buenos Aires in November.

The outlook for soybeans is worrisome, however. "You're not going to raise a crop that you lose $2 a bushel on every year," said Joel Schreurs, a Minnesota farmer who considers switching up to 30% of his soybean acres into corn next year if Chinese duties remain in place and federal assistance dries up. If enough U.S. farmers follow suit while Brazil, South America's soybean behemoth, makes improvements to its export infrastructure, the U.S. could cede the advantage in soybean production, he said.

The situation could pose challenges for farm retailers and grain traders charged with transporting crop supplies and handling a fresh flood of grain. But swinging more fields back toward corn could boost crop-seed sellers and fertilizer suppliers, analysts said.

Corn has tended to be a more profitable product for seed companies like Bayer AG, DowDuPont Inc. and Syngenta AG and would provide a boost to them, at least in the short term. With its longer growing season, corn is more susceptible to weeds and destructive bugs, meaning farmers often spring for pricey seeds with genes inserted to repel pests. Because corn produces more grain per acre than other crops, seed companies can also charge more for a bag.

At a seed-conditioning plant in Waterloo, Neb., farmers' early preference for corn means Syngenta employees are working to clean, scan and bag more corn seeds than normal for this time of year to prepare them for sale next spring. If farmers' renewed demand for corn holds, Syngenta may dip into its "safety stock" of corn seed to meet orders, said David Hollinrake, who heads the company's North American seed business.

Kevin Cavanaugh, director of research at Beck's Hybrids, one of the largest privately-owned U.S. seed makers, said the company's corn-seed sales are running 15% ahead of soybeans. While there is plenty of time for farmers to change their minds before spring planting, he said, "things are really lining up to grow more corn."

That would be a boon to fertilizer companies, particularly nitrogen suppliers like CF Industries Holdings Inc. and Nutrien Ltd. Corn plants can't produce their own nitrogen the way soybeans can, requiring farmers to apply it to their fields in the fall and spring to boost yields.

Researchers at the University of Illinois estimate that a farmer growing crops on rented land in northern Illinois will lose $64 dollars per acre of corn next year, versus $95 per acre of soybeans. It is the first time since 2013 that corn is projected to be a better economic proposition than soybeans, according to the researchers.

However, corn may not be a panacea, especially for farmers who have racked up debts, according to Matt Schreurs, vice president of lending at First Security Bank in Lake Benton, Minn. "We're running out of rope for a lot of operations," said Mr. Schreurs, who is Joel Schreurs' second cousin. Some farmers anticipate bankers will have a bigger say in planting decisions this year, scrutinizing a farm's finances before offering loans.

Farmers and grain elevators, particularly in the upper Midwest, are now struggling to find alternative markets for soybeans, as well as space to store this year's crop, which the U.S. Department of Agriculture projects will set a record. Many elevators are preparing to dump three story-high piles of grain on the ground to make room for soybeans in bins. Soybeans can rot if not dried properly, a growing fear in North Dakota, where a recent snow blanketed crops and delayed the fall harvest.

Soybeans have boomed in North Dakota, with planted acreage more than quadrupling in the past two decades as grain companies and railroads helped build up a corridor to the Pacific Northwest to carry the crop to hog barns in China.

Finding a home for surging corn supplies poses its own challenge. While U.S. hog and chicken farmers are expanding to supply new processing plants, the added animals likely won't be enough to absorb all of the bushels coming to market, said Ankush Bhandari, head of economic research for Gavilon, a U.S. grain trader.

"A lot of that [corn] would have to find its way into the export market, " he said.